DEBATE BETWEEN WILLING AND MC KENZÍE ON WELFARE MEASURE

At the Comment on the R. Wiiiing's article of "Consumer Surplus Without Apology," published by AER, 6/79, G.W. McKenzie basically tries to prove that the welfare indicator presented by him and F. Pearce, is superior to Wiiiing's indicator (actually it might be). To do that he picks certain sections (or subsections) and point from Willig's paper (probably without considering Wiiiing's article as a whole) and comes to following conclusions: a- Wiiiing's indicator can not be easily generalized to cases where prices of several commodities vary. According to him, Wiiiing's welfare measure is based on constant income elasticity of demand (or consumer preferences are homotetic) and as a result, his consumer surplus measure is nc. generalizable to the case of more than one good, if the matrix of uncompensated price effects is symmetric (condition of homoteticity) therefore, his indicator is valid only for rare cases and he failed to establish general conditions under which consumer surplus theoretically sound or empirically accurate.